TaxTMI 
TaxTMI 
2014 (3) TMI 955
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.... Rs. 6,85,000/- made to the returned income of the appellant firm by the assessing officer U/s.68 of the Income Tax Act, 1961, being introduction of capital by a partner namely Shri Shivgan Jetha Patel. 2. The Learned Commissioner of Income-Tax (Appeals) also erred in sustaining the disallowance of interest on capital of one of the partners, namely Shri Shivgan Jetha Patel, U/s.69 of the Income Tax Act, 1961. 3. The Appellant prays that the addition of Rs. 6,85,000/- and disallowance of interest thereon as above made to the returned income of the appellant firm by the assessing officer U/s.68 & 69C of the Income Tax Act, 1961, be deleted. 4. The Appellant craves leave to add ....
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....ct in any cash withdrawal. Accordingly, he sustained the addition of Rs. 6,85,000/- in the hands of the assessee. The assessee is thus in appeal before us. 4. We have heard the ld. representatives of both the parties and also have gone through the records. The first contention of the ld. A.R has been that since the assessee had furnished the return of income under provisions of section 44AD hence, there was no necessity to maintain books of account. The income under section 44AD is offered on estimation basis at the rate of 8% of the total turnover. For invoking or making additions under section 68, the maintaining of books of accounts is not necessary. Since the assessee had not been maintaining any books of account hence the additions ....
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....AD of the Act, if the total turnover or gross receipts in the previous year does not exceed the prescribed limit under this section, then a sum equal to 8% of the total turnover or gross receipts of the assessee or a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee shall be deemed to be profits and gains of such eligible business of the assessee. So from the provisions of section 44AD, it reveals that in the absence of books of account and subject to satisfaction of the requirements of section 44AD, the income will be assessed on presumptive basis at the rate of 8% of the gross receipts or total turnover. However, if the assessee admits or claims that it has received more income than 8% of the turnov....
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....case of furnishing return under section 44AD yet, if the assessee has maintained any accounts and has furnished the same with the return of income, like the capital account of the partners in the case in hand, the AO can examine said accounts and if he finds that there is an introduction of unexplained cash in the capital accounts of the assessee, he would be justified to ask the assessee to explain the source of such credits and in the absence of any satisfactory explanation, the AO will be justified in adding such sum into the income of the assessee. 7. In the case in hand, the AO found unexplained cash introduced in the capital account of the partners. The said capital accounts were also filed with the return of income furnished under....
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....he income of the assessee under the relevant sections. So far the contention that the additions, if any, can be made in the hands of the partners is concerned, the said contention will come into operation only when the assessee firm explains the source of credit. However, in the case in hand the assessee firm has failed to explain the source of cash even from the partners. Under such an event the AO is justified in adding the same into the income of the assessee firm. So far the case laws relied upon by the ld. A.R. are concerned, in the case of "CIT vs. Taj Borewells" (supra), the Hon'ble High Court has observed that it is the assessee firm to explain and prove the source of the money. Once the assessee firm has offered an explanatio....